Financial Appraisal of Office Depot
Part 1 Background introduction for Office Depot
Office Depot is a supplier of office products and services. The company's selection of brand name office supplies includes business machines, computers, computer software and office furniture, while its business services encompass copying, printing, document reproduction, shipping, and computer setup and repair. An S&P 500 company, Office Depot generates revenues of over US $14 billion annually and has 42,000 employees worldwide. It is headquartered in Boca Raton, Florida. Office Depot is one of the biggest office supplies retailers, but its sales revenue decreased dramatically 26% from 14.5 billion dollars in 2008 to 10.7 billion dollars in 2012.
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The technical products sales revenues accounted for only 20.9% of all, the ratio were 44.6% and 40% compared with Staples and Office Max respectively. 2. Weak Financial Performance A significant number of its vendors demand accelerated payments or require cash on delivery, such demands could have an adverse impact on its operating cash flow and result in severe stress on its liquidity. A downgrade in its credit ratings or a general disruption in the credit markets could make it more difficult for it to access funds, refinance indebtedness, obtain new funding or issue securities. 3. Weak Operating Performance Sales per retailing stores was average 6.4 million, the level stayed behind Office Max and Staples. The gross profit margin averages 30% while the operating profit margin almost 0%.
Opportunity
1. Expand online services As more consumers transfer their purchasing place from physical stores to online, OD could enhance the online selling power. 2. Acquisitions Staples’s revenue was twice the OD’s revenue, OD could merge with Office Max in order to compete with Staples at the same level. In addition, after that the alliance could integrate the source effectively and efficiently and cut more operating cost. 3. Emerging markets and expansion abroad Although the economy of America was sinking into mud, the emerging markets like the Golden Brick countries have much bigger purchasing power
Founded in 1901, Walgreens goal is to be consumers’ first choice for health and daily living across the nation, and a central part of people’s lives and the communities where they live and work. The company provides the most convenient, multi-channel access to goods and services, and pharmacy, health and wellness services while developing a new customer experience. Walgreens is the largest drug retailing chain in the United States as of 2012. A fiscal year for Walgreens end on August 31st, all of the measures are from either fiscal year 2012 or 2011.
Office Depot is the largest office superstore chain in the United States. Office Depot is first in total number of stores, first in average sales per store, first in average weekly store sales, first in total delivery sales
Dollar Tree, Inc. is an American-based chain of discount variety stores, selling every item for one dollar or less. The company’s headquarters is in Chesapeake, Virginia and operates more than four thousand stores throughout the United Sates (DollarTree, Web). Its stores are supported by a national logistics network of nine distribution centers. The enterprise operates one dollar stores under the name Dollar Bills and Dollar Tree. The Enterprise also operates a multi-price-point variety chain under the name Deal$. Dollar Tree company competes in the low-end and dollar store with the national chains Big Lots, Dollar General, Family Dollar together with other regional stores like Fred’s and Mary, 99 Cents Only Stores and many other independent dollar stores nationwide (Adam, 2011, Web).
As a manager of an individual Costco store, I would need much different information than an outside investor who is considering lending money to the company or investing in stock. The investor would be looking for general data that would give him an idea of how Costco is faring within the industry (Edmonds, Olds, & Tsay, 2008). The investor would be desiring financial accounting data. As a manager of a Costco store, I would be desiring managerial accounting data. I would only be interested in the specific data that pertains to the store that I manage. The investor would be interested in data that concerns Costco as a company. Other stores could be performing at a higher level than my individual store and lessen the impact of my store to the
After the United States broke away from England, it underwent a major growth that was unprecedented in history because of its location, the Western Expansion, and the second Industrial Revolution that took place. The location was an advantage because of the oceans on both side and being far away from the European powers, which allowed the nation to grow uninterrupted (Medina). The Western Expansion gave the US more in terms of natural resources, such as coal and iron. The Industrial Revolution also helped since there was an increase in immigration, which meant that there were more workers, more consumers, and more mass production (Medina). When the west “closed”, the US turned to imperialism and their sights towards Asia and Latin America.
Post-war inflation, rampant speculative investments (overwhelmingly in railroads), a large trade deficit, ripples from economic dislocation in
After the consolidation of the OfficeMax with the Office Depot, the merger resulted to a strong revenue growth of 43.2% reaching $16.1 billion. However, the merger incurred $354 million loss in the same year which is mainly attributed to supply chain mismanagement, restructuring costs, and higher operational expenses.
OfficeMax Inc. sells and market office products. The Company distributes and retails a variety of products such as office supplies, technology products, and business furniture. OfficeMax sells through stores located throughout the United States, Canada, and Mexico, and many of the products are also sold through its catalog and online. In the United States, it is based in Illinois and was established in 2005.
Sears Holdings is a relatively new company, having only been created in November of 2004 (Barbash & Barbaro, 2004). At that time, Kmart Holdings purchased Sears, Roebuck, and Co. The corporation decided it would operate stores under both names, and the merger was officially completed in March of 2005. The shareholders voted to close the deal, or it would not have been able to take place. Now the company is called Sears Holdings, and it operates both Sears and Kmart stores (Barbash & Barbaro, 2004). The company also markets both brands without blending them or favoring one over the other. There were several reasons why the companies chose to combine.
These three segments of Staples demonstrate their competitive advantage in the industry. Staples is actively involved in every major facet of the office supply
There are 2 years covered in the Consolidated Balance Sheet, namely fiscal years ended 1 February 2004 and 2 February 2003.
Staples, Inc. was founded by Thomas George Stemberg, who was a super market chain executive. Stemberg was born on January 18th, 1949 in Newark, New Jersey and died on October 23rd, 2015 at his home in Chestnut Hill, Massachusetts. He lost his battle with cancer. Stemberg attended Harvard University on a scholarship where he majored in physical science. After obtaining an MBA from Harvard Business School, he started to work for large grocery companies. On July Fourth weekend, 1985 Stemberg was working on a proposal when his typewriter’s ribbon broke. Due to the holiday local stores were closed and he did not find the right ribbon for the typewriter. It was then when Stemberg realized “the world needed a supermarket for office products.” On an
This Profit Margin ratio is acceptable, though not high. The result means that for each dollar of sales at Sears Co., the company earns only 3.27 cents in 1997, compared to 3.77 cents and 5.78 cents in 1996 and 1995 respectively. This slim and downward trend profit margin obviously won't make its investor happy.
Also, the gross profit had a lower increase(+9.67%), that means the cost of sales increased more than the revenue increase in term of percentage. There was a 13.16% rose in net operating expense as both selling and distribution costs and administrative expenses increased. One of the reasons why net operating expense increased because the firm had a programme of reinvesting for organic growth which supply chain, IT and store portfolio had improved. The rose of the net operating expense lead to a 2.13% drop in the operating
This report is issued in order to inform the public about Microsoft Corporation. We analyzed the profitability and liquidity of this company. In addition, we were able to provide recommendations for investments or credits in Microsoft for the best interest of the public.